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YouTube admits ad impasse

'Coke doesn't get us'

Supernova Many have argued that online video will satisfy the world's advertisers in ways that traditional television never could. With online video, the pundits proclaim, channels are infinite, and you can choose whatever you like whenever you want it. That means advertisers know exactly what you're interested in - and they can serve you the perfect ad.

But at the moment, this is little more than a pipe dream. So says YouTube.

Speaking at Supernova2008, a business-centric tech conference that kicked off this afternoon within shouting distance of San Francisco Bay, YouTube's Jordan Hoffner pointed out that many of today's advertisers aren't all that interested in the so-called fragmented audience.

"The one thing that's not there with the fragmentation of media is a large audience," said Hoffner, YouTube's head of content partnerships. "We've seen that because of the increased fragmentation of audiences, brand advertisers that we deal with - Coca-Cola, Proctor and Gamble, General Motors - feel like they're missing something. They want to know how you reach a large number of people with a small amount of money."

It was a refreshing admission. The two other online video heads who spoke alongside Hoffner - sevenload's Axel Schmieglow and CurrentTV's Joel Hyatt - gave that familiar online-video-will-crush-tv pitch.

"Suddenly, someone who lives in Montana and is an expert on the love life of snails in Greece...can upload his talks about the love of snails in Greece, and he can start marketing that expertise," Schmieglow said, sitting to Hoffner's right. "Scale in terms of page impressions is going to have less and less impact. And scale in terms of relevance is going to have more and more impact."

But as Hoffner points out, this sort of rosy outlook means nothing unless you can actually convince advertisers to advertise. "If you really want to get into how the media industry is going to be reconstructed, you have to look at the ad agencies and the marketers in terms of how they spend money and how they're structured."

So many advertisers, he said, are obsessed with six- to seven-figure deals. "You have to amass a lot of impressions to fulfill that buy, and that's a tough thing in a fragmented media world."

Sitting to Hoffner's left, Current TV CEO Hyatt was unconvinced. He continued to rattle on about new ad models superseding the old. "The real way to disrupt television is to come up with an ad solutions that would be as performance-based, as effective, and as productive to advertisers as Google search advertising is," he said. "That isn't available on TV today."

Again, this is a familiar argument. Nearly a year ago, Google's own Vincent Dureau blurted much the same thing at an internet TV-themed conference down in San Jose, California. But Hoffner - who also works for Google - isn't saying that raw scale is the be all and end all. He's saying that advertisers think it's the be all and end all.

The trouble, he says, is that there's a disconnect between traditional TV advertisers and the very new world of online video. "There's definitely a culture difference between the technology community here [in Silicon Valley] and Madison Avenue back on the east coast," he said. "They don't really know how to talk to each other.

"We need more of a dialogue. It's not about going to advertiser and saying 'I'm going to come up with the great advertising model that's going to take the $170bn from cable TV and bring it to the internet.' It's about problem solving that involves everyone in the room."

Today's lesson: Offering the technology is only half the battle - or less. ®